“在投资产业可能上市之前，一系列的资产收购，预计将扩大该集团的投资资产组合，净负债率亦随之提高。”Analysts have mixed views on IOI Properties Group's (IOIPG) acquisition of Tropicana Gardens Mall, as well as its impact on the group's debt level.
MIDF Research and Hwang Investment Bank maintain earnings forecasts for the group.
MIDF maintains a 'neutral' rating on IOI Properties, with a target price lowered from MYR 2.40 to MYR 2.25 in its report today.
"A series of asset acquisitions before investment properties may be listed is expected to expand the group's investment asset portfolio, and the net debt ratio will also increase as a result."
"Therefore, we adopt a neutral attitude towards the acquisition, and the estimated net debt ratio will increase from 0.74 times in the third quarter of the 2024 fiscal year to 0.78 times."
Due to the high net debt ratio, MIDF has expanded its discounted realized net asset value (RNAV) from 53% to 56%. Therefore, the target price was lowered from MYR 2.40 to MYR 2.25.
"We maintain a 'neutral' rating on IOI Properties because there are limited catalysts in the short term."
On the other hand, Hwang Investment Bank maintains a 'buy' rating on IOI Properties, with a target price of MYR 3.30, and points out that the acquisition price of MYR 0.680 billion for Tropicana Gardens Mall is a 28% discount compared to its book value of MYR 0.944 billion.
The research institution said that the reason the group was able to purchase the property at a discount was because it had acquired several large assets from Tropicana Corp Bhd.
Hwang Investment Bank said that although the mall is currently losing money, the acquisition is valuable because of its prime location, direct connection to the Surian MRT station, and proximity to several towns, including Kota Damansara, Sunway Damansara, Pearl Damansara, and the soon-to-be-developed Kwasa Damansara.
The institution said that after including the acquisition of Shenton House (MYR 3.530 billion), Tropicana Gardens Mall (MYR 0.680 billion), and the land in Langkawi (MYR 90.1 million), IOI Properties' net debt ratio is expected to increase from 73.3% in the third quarter of the 2024 fiscal year to 92.2%.
"Although the net debt ratio seems high, the group may recognize a significant revaluation gain from IOI Central Boulevard in the upcoming fourth quarter of the 2024 fiscal year, which will lower the group's net debt ratio."
Hwang Investment Bank added that IOI Properties is currently releasing the huge value of its Singapore assets, namely IOI Central Boulevard and Marina View Residences.
"The stock is still severely undervalued, especially considering that the value of its real estate investment and hotel assets is more than twice its market capitalization, and even its underground value has not been taken into account."
During the trading halt, the stock fell 3 sen or 1.38% to MYR 2.14.
